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Bollinger Bandwidth

A technical analysis indicator derived from Bollinger Bands. It is best used to signal the beginning of a trend after the volatility has fallen to low levels. Hence, it is considered an important tool to be used with “The Squeeze”. A breakout of the Squeeze is usually accompanied by an expansion in the Bandwidth which is a good indication of a sustainable trend. Moreover, the Bandwidth may be used to spot the end of the trend. It usually flattens out while the Band opposite of the trend turns in the same direction as the direction of the trend. The formula to calculate the Bandwidth is as follows: (Upper BB – Lower BB) / Middle BB)

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